NOTE 7 - DERIVATIVE LIABILITY/FAIR VALUE

3 Months Ended

Mar. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Text Block]

NOTE 7 - DERIVATIVE LIABILITY/FAIR VALUE

The derivative liability consists of the following:

	March 31, 2012		December 31, 2011
Warrants	$	426,659	$	333,329
Conversion feature		-		-
Derivative liability	$	426,659	$	333,329

The derivative liability related to the outstanding warrants was valued using the Black-Scholes option valuation model and the following assumptions at March 31, 2012:

Risk free interest rate	.83	%
Expected volatility	399	%
Expected life (in years)	4.75
Expected dividend yield	0

The derivative liability associated with the convertible debt conversion feature was reviewed by management and the fair value of the conversion price exceeded the trading value (fair value) of the common stock into which it converts.